startups in china - insights on founding a company

Startups in China

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STARTUPS IN CHINA


Startups in China

• China had a critical shortage of skilled labor

• ChinaNetCloud was founded to help solve this problem

• How two white guys succeeded in China

FOUNDING CHINANETCLOUD

Startups in China


FOUNDING CHINANETCLOUDChina had a critical shortage of skilled labor

• A big problem in China is finding the skilled employees that you need to build your business.

• China has shortages of almost every critical profession.

• Not enough engineers.

• Not enough expertise.

• All due to the fact that these industries are still very new to the area.

Startups in China


FOUNDING CHINANETCLOUDChinaNetCloud was started to help solve this problem

• The amount of infrastructure needed to supply the country’s demand for data is just massive.

• Companies need help finding the talent to run it all.

• Outsourcing provides access to world-class talent, processes, and procedures at an affordable cost.

• CNC is here to build and run it all.

Startups in China


FOUNDING CHINANETCLOUDHow two white guys succeeded in China

• There are a lot of very successful foreign-owned companies in China.

• Most of the time you simply don’t hear about them.

• For example, a friend in Beijing is a top exporter of granite to the US, working directly with the miners in Shaanxi.

• It is a huge business, with an equally huge market that no one has ever heard of.


Startups in China

• In China, it doesn’t always pay to automate.

• Dealing with Venture Capitalists

• Reducing Risk - “Can you do it?”

• Example - ChinaNetCloud

• Keys to Early Success

• Finding the right pricing mix

FOUNDING A COMPANY

Startups in China


FOUNDING A COMPANYIn China, it doesn’t always pay to automate

• Automation requires an investment in technology, programmers, and equipment.

• Local labor is an abundant and affordable resource that can be trained and developed.

• Interns are also valuable, as some can have years of work experience and noted achievements.

Startups in China


FOUNDING A COMPANYDealing with Venture Capitalists

• Approaching VCs is all about risk reduction.

• VCs hate risk, and they’ll do anything to reduce the potential risk.

• Presenting a good value proposition is sometimes a combination of a growing market, large outcome, high margins, and low risk.

Startups in China


FOUNDING A COMPANYReducing Risk - “Can you do it?”

• Investors are paying to reduce risk.

• The next great idea is awesome but the key question everyone will ask is “Can you do it?”

• Answer this by finding 10 people that are credible and willing pay for your solution.

• Find well-known advisors that have experience in the market and ask for help.

Startups in China


FOUNDING A COMPANYExample - ChinaNetCloud

• Having a business plan is nice.

• Proving that you can do something is better.

• Before becoming a legal company, ChinaNetCloud had an office, employees, revenue, and even customers.

• We were doing things, showing that we could take an idea and grow it into a thriving company.

Startups in China


FOUNDING A COMPANYCorporate Culture

• Corporate Culture is very important for startups.

• The employees are led by the Founders, their style of dress, their idiosyncrasies, and even language use.

• Employees will follow their good habits, and will definitely pick up the bad ones.

Startups in China


FOUNDING A COMPANYKeys to Early Success

• The three most important things in the restaurant business are location, location, and location.

• But investors say it’s people, people, and people, followed by the products, and then the market, ect.

• If the people are awesome and have a strong drive then it will be hard to fail, especially with so many individuals pushing forward.

Startups in China


FOUNDING A COMPANYKeys to Early Success

• Fewer partners are better.

• It’s hard to start a company with friends, especially more than a few.

• People will inevitably flake out, you’ll never know who is in it until the end.

• Families, commitments, job offers, there are a lot of outside reasons for someone to want to duck out early and complicate things further.

Startups in China


FOUNDING A COMPANYFinding the right pricing mix

• Being able to go out, find a customer, and then make a large one-time sale is a great skill to have.

• Being able to do the same and have that customer pay you every month until they die is better.

• Cash is very important to a startup.

• A steady influx is much better than one that relies on many different variables.


Startups in China

• Finding Startup Employees

• Cultural Dynamics

• HR Challenges

STARTUP CHALLENGES IN CHINA

Startups in China


STARTUP CHALLENGES IN CHINAIt’s hard to find startup employees

• In China, few people will work for free or for equity for any length of time.

• Finding someone to work on a reduced salary is likewise just as tough.

• People can be overly greedy, often lacking vision of the future.

• There are very few role models for the Chinese to look up to, very few people started with nothing and built an empire.

Startups in China


STARTUP CHALLENGES IN CHINACultural Dynamics

• In a country such as China, there are vast cultural gaps between cities and towns.

• China is like the US 100 years ago. It is quick, flexible, and very different from the current US.

• However, some things are still easier to do in California.

Startups in China



• China has very low wages, and with little upwards wage pressure it creates a lot of stress to meet cultural expectations.

• A typical man is expected to have an expensive car and an even more expensive house before even thinking about marriage.

• On the other hand, people end up walking around with brand new iPhones that cost two months of their salary.

Startups in China



• China has a hierarchical or experienced-based culture, older people feel that they should be paid more regardless of actual job experience.

• Older = Senior, so they expect triple or even 4x the pay.

• This creates a pool of unemployable people, with more being added as they now lack English or other needed technical skills.

Startups in China


STARTUP CHALLENGES IN CHINAHR Challenges

• Hire slowly and fire quickly.

• It isn’t at all strange to have to find, hire, and fire an entire sales team multiple times.

• The best way to find people is through peers.

• Recommendations can be very powerful, more so than resume sites. You can network your way to a solution.

Startups in China



• Interns can also be a great solution.

• But hiring local interns can be tough, very few of them have any work experience at all.

• Their resumes only say that they went to school and had a good test score.

• Foreign interns usually have extensive work experience, sometimes even solid accomplishments.

Startups in China



• The best thing to do for local interns is to keep them motivated.

• Find the ones that are good and push them, show them a career path and where they can end up if they keep trying.

• And give them support, as they are often younger than you think.


Startups in China

• China has a shortage of interaction in the startup community

• There is a lack of Entrepreneurial role models in China

• Working in a startup is very beneficial

• China has a lack of Founders

DIFFERENCES IN STARTUP CULTURE

Startups in China


DIFFERENCES IN STARTUP CULTUREChina has a shortage of interaction in the startup community

• There are a limited amount of useful things happening in a month.

• Even in Beijing, it can be a struggle just to find events to attend.

• This limits the amount of cross connections and networking options resulting in a lot of lone wolf activity.

• In Silicon Valley and other technology areas, there are events for every niche, every night of the week.

Startups in China


DIFFERENCES IN STARTUP CULTUREThere is a lack of Entrepreneurial role models in China

• In Silicon Valley everyone knows someone who’s made a lot of money.

• The front desk girl at Google ended up being a millionaire from her stock options.

• Outside of China there are a lot of young people succeeding at creating startups.

• This generates hundreds of millionaires that then go on to become investors and spawn countless generations of startups.

• The absence of this cycle leads to a lack of Serial Entrepreneurs to continue to create and innovate.

Startups in China


DIFFERENCES IN STARTUP CULTUREWorking in a startup is very beneficial

• Working in a startup and developing your entrepreneurial skills, etc., is very important to employers 5-10 years down the road.

• Do whatever you can to add value to your endeavors and to do new things.

• Young people in China aren’t encouraged or allowed to develop Entrepreneurial skills due to the pressure parents put on school.

• ChinaNetCloud even has to print HR books for some of the local interns to give to their parents to help smooth over objections.

Startups in China


DIFFERENCES IN STARTUP CULTUREChina has a lack of Founders

• There’s no concept of working for equity in China.

• No one starts with a company, becomes famous, and walks out with millions.

• Equity and stock options fund the Valley, yet in China there’s no post-startup equity, think early Facebook and Google employees.

• The 25% option pools typical in the US are only 5% in China.

• This ends up hurting the country, keeping the money very centralized instead of within the startup community.


Startups in China

• There are a lot of business opportunities in China

• China is the expert in monetizing online games

FUTURE ENTREPRENEURSHIP

Startups in China


FUTURE ENTREPRENEURSHIPThere are a lot of business opportunities in China

• There is simply so much going on in China. It is cheap, fast, and has a limited amount of bureaucracy.

• However, a lot of stuff has already been done, the country is reasonably developed after all.

• For the wild west, try Burma, Cambodia, or Vietnam.

• China still has advantages, and the experience of living here and learning the language will help in the future.

Startups in China


FUTURE ENTREPRENEURSHIPChina is the expert in monetizing online games

• The US is nowhere near China on this.

• Tudou had services, features, and functions way before Youtube, but there was no real demand at the time.

• The Chinese don’t watch TV like the Americans do, they want their content instantly, without having to wait another week for a new episode.

• This pushed streaming technology and is a primary reason why Tudou grew so fast.


Startups in China

• Don’t be afraid to share your ideas

• Taking the first step is usually the hardest part

• Failure is valuable

PARTING ADVICE

Startups in China


PARTING ADVICEDon’t be afraid to share your ideas

• If your idea is so copyable that everyone in the building can steal it in five minutes then it’s useless.

• Share your idea, show people, develop, and get ideas from other people.

• Talk it out, find out how hard it will be to build, who already is doing it, what kind of pricing to use, etc.

• Ideas will follow you if you are out there, interacting.

Startups in China


PARTING ADVICETaking the first step is usually the hardest part

• Join someone else’s company first, work for a year or even ten to gain the experience you need.

• Work for free if you have to.

• Let opportunity seek you out.

• The more planning and organization that you put into the project will simply make executing it easier.

• But no matter what your idea is, just go and do it.

Startups in China


PARTING ADVICEFailure is valuable

• If you fail then the worst thing that happens is you lose everyone else’s money.

• Go eat at a soup kitchen for awhile, pick yourself back up, and head into the next opportunity with new knowledge.

• The experiences you gained will still be valuable to a future employer.

ABOUT CHINANETCLOUDFounded in Shanghai in 2008, ChinaNetCloud is one of the world's largest Internet Managed Services provider.

Our focus is on server operations, especially Reliability, Performance, Scale, Security, and Cost Savings.

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Startups in China


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